Ohio lawmaker targets politicians' 'transition' accounts

State lawmakers will consider creating disclosure requirements for a special type of financial account politicians use to pay for office transitions and inaugurations.

State lawmakers will consider creating disclosure requirements for a special type of financial account politicians use to pay for office transitions and inaugurations.

The move comes one week after Ohio’s government watchdog said former Attorney General Marc Dann had entered “new and unregulated territory” when he created a nonprofit corporation soon after his election in 2006 that raised nearly $200,000 from individuals and businesses.

Money from Dann’s transition account was spent on Dann’s wife’s business and on aides who were already getting state paychecks, the report said. The accounts are not subject to campaign finance laws that establish transparency, limit contribution amounts from individuals and ban contributions from businesses.

But the accounts, which fall under the Internal Revenue Service code that regulates nonprofits, weren’t just a creation of Dann, who resigned in May amid a sexual harassment scandal involving a top aide.

Gov. Ted Strickland, Auditor Mary Taylor, Treasurer Richard Cordray and Secretary of State Jennifer Brunner all had the same type of account. They are also used by officials across the country.

“Why would we require everyone to report every shoe button in a campaign fund and then after they are elected have a period of no reporting of what they get?” said state Rep. Bill Batchelder, the Medina Republican who will push a bill next year to create disclosure requirements for the transition corporations.

“I think it puts the person in a potential conflict situation when it’s done without any transparency,” he said.

Transition accounts largely fly under the radar of those who track and criticize the influence of money in politics. But the accounts have all the ingredients of a system that can be abused, said Steve Weissman, associate director for policy at the Campaign Finance Institute, a nonprofit organization affiliated with George Washington University.

“Anytime you have undisclosed potentially large donations you have the potential of corruption,” Weissman said. “And no one can see it. It’s easier to do a favor for somebody when the somebody is invisible.”

Brunner, who was elected at the same time Dann was, raised about $43,000 in her transition account from sources such as Nationwide Insurance, Duke Energy and the Craig Group, a major Columbus lobbying firm. The largest portion of the funds — about $18,000 — went toward inaugural activities. About $7,500 went toward consulting expenses, but Brunner’s office said it could not provide further details.

Brunner spokesman Kevin Kidder said the account was used solely for inauguration and transition purposes.

“Transition corporations are not mentioned specifically as far as regulation in state law,” Kidder said. “Whether they should be regulated is a decision for state lawmakers.”

Dann’s account and Brunner’s account were set up by the same firm — the Brunner Firm of Columbus.

Treasurer Richard Cordray raised about $114,500 when he moved into the office in early 2007, said Harry Lehman, a retired Columbus lawyer who was chairman of Cordray’s transition account.

Cordray, who was elected attorney general in November, has decided to pay for his new transition expenses out of his campaign funds or with help from the Ohio Democratic Party, Lehman said.

While agreeing that better financial disclosure is a goal few would be against, Dann attorney Don McTigue criticized last week’s report by Inspector General Tom Charles for singling out Dann’s use of the accounts and for saying the funds are unregulated.

McTigue said the IRS has oversight of the transition accounts, which must meet specific guidelines to maintain their tax exempt status. Part of that involves filing a form that shows contributions and expenditures, although not to the same degree of specificity required in standard campaign accounts.

Dann last week also criticized Charles’ report as motivated by the inspector general’s bias against him.